Corbett shifts on Medicaid work-search requirement

State Sen. Vincent Hughes said the governor is "moving in the right direction" but his proposal "falls short" because of the year delay and benefits reductions. (COURTNEY MARABELLA / Staff Photographer)

By Don Sapatkin and Amy Worden, Inquirer Staff Writers

Posted: March 08, 2014

Gov. Corbett has backed off his insistence that a work-search requirement be included in any expansion of Medicaid coverage to hundreds of thousands of uninsured Pennsylvanians, lowering a major stumbling block for approval of his proposal.

In a letter to Health and Human Services Secretary Kathleen Sebelius, Corbett suggested turning the work-search requirement into "a voluntary, one-year pilot program to positively encourage those who are able to work" by reducing premiums.

Corbett acknowledged in his letter what policy experts have said for months: that the federal government opposes a policy that linked health benefits and job training. Whether removing the mandate would be enough of a change was unclear.

"Job training is outside the scope of the Medicaid program. But it is encouraging that the governor is showing flexibility," said Joan Alker, a researcher at Georgetown University Health Policy Institute and an expert in states' requests to waive requirements of Medicaid law.

"I think they can get to 'yes,' but the governor is going to have to continue to show some more flexibility," she added, in ongoing negotiations over a range of issues, from cuts in current benefits to the whole idea of using private companies to provide public health insurance.

Corbett has said that he used as a model the alternative Medicaid expansion that was approved for Arkansas last year.

The Pennsylvania proposal goes further, said Deborah Bachrach, a partner at Manatt Health Solutions who consulted on the Arkansas plan.

While not mandatory, the new work-search offer would encourage work or searching for work by potentially reducing premiums up to 40 percent. The premiums themselves, while small, could be an issue, Bachrach said.

"Up until now," she said, the federal government "has not permitted a state to condition eligibility on payment of premiums," although it did allow Iowa and Michigan to charge premiums without punishment for nonpayment - an obligation without enforcement.

Corbett's plan would not take effect until Jan. 1, one year after coverage began in most of the 25 states that have opted to accept federal money to expand Medicaid; premiums would not start until 2016. All those states would cover people who make less than 138 percent of the poverty level ($16,105 for an individual in 2014, $32,913 for a household of four).

Corbett has said that his full plan does not require legislative approval. Democrats have nevertheless come out in opposition, saying it is unnecessarily complicated, punitive, costly, and late.

State Rep. Dan Frankel (D., Allegheny) said Wednesday that the Republican governor's move on the work requirement makes his plan "slightly" more palatable. "He is clearly anxious to get something done because he has suffered politically," Frankel said.

Sen. Vincent Hughes (D., Phila.) said the governor is "moving in the right direction" but his proposal "falls short" because of the one-year delay and benefits reductions.

There is no timeline for approval of waivers to Medicaid law, although in this case the federal government will pick up 100 percent of the cost of covering an estimated 500,000 Pennsylvania residents for just three years, gradually declining to 90 percent.

Corbett's "Healthy Pennsylvania" plan would miss the first year of full federal payments, a loss estimated at more than $1 billion.

Still, the plan would help the state "determine best practices and success rates" in moving people from public health insurance to private plans "through gainful employment," Corbett said in his letter.

Children, the elderly, pregnant women and disabled people would be exempt from the work search pilot program, as they were in his earlier proposal, which was submitted to HHS two weeks ago.

The "encouraging employment" provision would apply to current Medicaid recipients as well as those for whom he is seeking permission to cover with private insurance using federal Medicaid dollars.

The Corbett administration began discussing alternatives with the Obama administration 11 months ago, said Jennifer Branstetter, the governor's director of policy and planning. She called the letter sent late Wednesday, "another iteration of negotiations back and forth."

At the White House with other governors last week, she said, Corbett buttonholed Secretary Sebelius and asked if she would consider a voluntary alternative to the mandate that her staff opposed. It would be customized to serve the needs of the state.

"He said: 'I'm asking you, Madam Secretary, to give Pennsylvania a chance. To show that this works,' " Branstetter said.